Did the Reserve Bank massage its OCR forecasts to help Labour keep power? (we’ve found evidence pointing to it)

• Rob MacCulloch writes – 

Last year, in the lead up to the national election, Governor Orr said in May 2023 that he was “very confident” there would not be further interest rate hikes, stating the Reserve Bank had done enough in terms of rate rises.

He was interviewed by Mike Hosking on Newstalk ZB on the subject of his rampant confidence in the economy – as this was a highly sensitive matter in Election Year. Hosking also spoke at the same time to former RBNZ Governor, Don Brash, who expressed severe doubts, saying, “[But] the governor indicated it [the OCR] would not be going higher, and that was a surprise both for the market and me personally.”

Reading the MPS numbers thinking about the fiscal situation

• Michael Reddell writes – 

The Reserve Bank doesn’t do independent fiscal forecasts so there is no news in the fiscal numbers in today’s Monetary Policy Statement themselves. The last official Treasury forecasts don’t take account of whatever the government is planning in next week’s Budget, and as the Bank notes they will need to update their assessment in light of whatever the spending and tax plans prove to be.

So I was more interested in the Bank’s numbers for the things they do forecast independently, and which in turn have implications for both the tax revenue the government could expect to collect on any given set of tax rates and for the likely expenditure pressures (from things like population growth and inflation).

ANZ economic comment draws clouds over Robertson’s sunny outlook – but Stats NZ brings good job market news

Finance  Minister Grant Robertson  insists  the NZ  economy has  “solid fundamentals”,  as  Point of Order   noted last week.   He concedes  there is  uncertainty   because of slowing  global  growth,  Brexit,  and trade wars but argues NZ’s  economy is  doing  better than what he calls  its international peers.

He reckons there are “many, many signs that things are getting better under this government”.

So what  to make   of the   report  this  week  from ANZ Bank economists titled “That Sinking Feeling”?

Bracing for this week’s release of Q2 labour market statistics and the RBNZ’s August Monetary Policy Statement, they look at some of the key developments the RBNZ will have to consider, “and it’s not looking pretty”.